The control environment donot:
A) set the tone of an entity.
B) set the foundation for all other components of internal control.
C) refer to the policies and procedures that help make sure management's directives are carried out.
D) influence the control consciousness of employees.

Question

Quizplus · Accepted Answer

The control environment refers to the overall attitude, awareness and actions of an entity's management and employees regarding internal controls. It includes the ethical values, integrity, and competence of the entity's people, as well as the structures, policies, and procedures that management has put in place to help ensure that directives are carried out. Therefore, option C is incorrect because it is not the definition of the control environment; instead, it describes a component of it. Options A, B, and D are all true statements about the control environment.

The Control Environment Donot